What is ERP and Everything You Need To Know About This Technology

9 minutes read - March 10, 2021 - by Yondu Team
Here is everything you need to know about ERP, what the technology is for, and how it works.

Are you running a business with a huge number of products, employees, departments, and processes to manage daily? Or perhaps you’re looking to automate your business systems?

When operations become too overwhelming or you feel the need to boost efficiency, this is where ERP software comes in.

Here we’ll explain what ERP is, how it works, as well as its key features and benefits. We’ll also talk about how this solution can actually help your business moving forward.

Finally, we’ll get you started in finding the best ERP software in the Philippines.

What is ERP?

ERP stands for Enterprise Resource Planning. Instead of spreadsheets, ERP is a suite of software programs that help in your business management functions.

Essentially, ERP collects and organizes your complex business information and aids in automation. It unifies your business elements into one system including supply chain, accounting, inventory, service delivery, CRM, and everything in between.

ERP brings huge amounts of business information into one shared database. This is the single source of truth that users see — no duplicates — for efficient data access and analysis.

A good ERP solution can be extremely important for enterprises, no matter the size. It boosts productivity and improves overall business performance. 

Growing companies rely on ERP in their day-to-day operations. Large enterprises also track each department’s progress and make decisions using ERP. 

In a nutshell, ERP is a tool that brings together everything and everyone within your organization.

How ERP works

Cloud ERP connecting company staff

An ERP system is composed of applications, also called “ERP modules,” that “communicate” using a common database.

For example, think about your business and its day-to-day activities.

You have products to sell and various departments that have control over different stages. These might even be running in multiple locations. There are operations, supply chain, order fulfillment, customer management, financials, reporting, and perhaps more.

Similarly, service providers usually have project management, accounting, HR, and customer management at the very least.

When one person enters data into an ERP system, it will be visible to the rest of the organization real-time. These can be transactions, status updates, or any other relevant information that may even come from your other business sites.

With this visibility, managers can assess and compare the performance of each department. Users who have access can track movement in operations and make informed decisions promptly.

Simply put, ERP collects complicated information throughout business activities. It then organizes them in their respective modules, into one system.

The result? Sped up business processes; minimized errors; and enhanced workplace productivity.

What are the benefits of having an ERP software?

So you’ve got your answers about what an ERP is and how it works. But what are the practical benefits an ERP solution can give you? Here are some of the major ERP benefits you can take advantage of:

1. Automated business processes

ERP technology helps you to automate your business’s repetitive tasks and routines. These may include order fulfillment, procurement, stock replenishment, financials, even reporting. Plus, ERP can save your company huge costs. First, you won’t be needing a lot of employees to do minor routinary tasks. Second, automated processes significantly reduce errors in your workflow saving money and time. 

2. Efficient workflows

Given that your business operations run within one system, ERP can simplify tasks. You’ll have an integrated workflow spanning a full range of business functions from finance, inventory, CRM, project management, and accounting. Your people and stakeholders can then focus on their responsibilities and do their jobs more efficiently.

3. Higher customer satisfaction

ERP can greatly improve customer satisfaction. With more effective systems in place, companies can provide the best customer experience quick. Think about no delays, minimal errors, efficient pre- and post-sales services. Indeed, these make for great customer service.

4. Secure data

Data is of utmost importance, especially in today’s digital economy. ERP software providers know that. ERP solutions are designed with security in mind and should implement strict security protocols. Even more, they should also be able to detect and counter cyber threats.

5. Actionable business insights

An ERP system provides access to real-time and comprehensive business insights. With companywide visibility of information, decision-makers within your organization can evaluate situations better. Consequently, this feature helps in arriving at practical solutions and troubleshooting.

6. Adaptability and scalability

ERP systems should be scalable enough to stay useful today and in the future. As we say, it should scale as you grow. ERP adapts well to your growing companies’ current operations as well as its future requirements. Customization is also highly enabled in some of the best ERP solutions to perfectly suit business needs.

7. Synergy

Sharing the same information hugely affects how your organization is glued together. ERP solutions allow people to work as one on projects and simplify the tasks involved. Users can see what’s happening in different areas and proceed with their functions accordingly.

8. Flexibility

A good ERP solution is built with flexible features. ERP companies understand a business’s own processes and requirements. Users can then design applicable workflows through ERP. Reports are also modified according to the person who needs them.

What are on-premise and cloud ERP software?

On-premise and on-cloud ERP are types of ERP deployment. Here’s more about the two main ERP deployment options and their key differences:

  • On-premise ERP systems. On-premise ERP is deployed within your company’s IT infrastructure. Your business systems are installed and run in your own data center and servers, on-site. This type of ERP deployment is maintained in-house, by your company’s own IT staff. In the past, this has been the only way an ERP solution is deployed. 
  • Cloud ERP systems. Cloud ERP is a more modern ERP solution. It is supported by a cloud ERP provider that gives users access to an integrated suite of applications. Cloud ERP solutions run and are accessed via the internet. This type of ERP also generally translates to lower upfront costs. With Cloud ERP, computing resources are maintained in remote data centers by your provider and are leased monthly. No need to install hardware and software, nor hire IT staff with specialized expertise.

How can an ERP software help and grow your business?

Warehouse manager monitoring success reports on mobile

There are many ways that an ERP software can help as well as expand your business. Below are a few of them:

1. Saves you costs

ERP allows companies to create more efficient workflows and streamline processes. Companies can then allocate their resources like manpower wisely and therefore save huge bucks.

2. Reduced errors

Spreadsheets can be error-prone, uncoordinated, and just plain disorganized. Most of the time, this leads to problems affecting the whole organization. With an ERP solution, you can significantly reduce human errors and be more productive.

3. Up-to-date information, anytime, anywhere

ERP systems give real-time reports and data to its users at all times. One great example is Acumatica Cloud ERP’s no latency and synchronization issues. Plus with its mobile capabilities, any user can gain access and work from anywhere. Also with real-time business insights, leaders can immediately spot and solve problems before things get worse.

4. Automation accelerates your business

Automation is not just a trend; it’s the future. ERP opens up a lot of opportunities to accelerate your business and continue strong towards the future. With automated processes brought by an ERP system, you can get to your business goals faster.

5. Cloud computing is the future

We strongly believe that cloud computing is the future, especially when it comes to ERP. Cloud ERP software is faster to implement and flexible even when your computing and or storage needs change over time. More importantly, with a cloud-based ERP, expanding your company geographically is much easier since your ERP runs on the internet. And the internet is pretty much everywhere.

What industries benefit from an ERP software?

In the Philippines, many industries can largely benefit from an ERP software. Below are just some of them that can be transformed by modern ERP business solutions:

  • Distribution
  • Manufacturing
  • Service Industries
  • Retail & eCommerce

And the list goes on. If your industry isn’t on the list, don’t fret. This is just a sneak peek. Check out Acumatica Cloud ERP for other industries. Or better yet, watch real customer stories across various industries that benefit from ERP.

Who in your organization can use ERP?

Woman viewing reports during brainstorming session

Since ERP acts as the glue that binds your organization together, it can be helpful across all business units. This includes human resources, project managers, customer representatives, and more. Here are other specific teams and functions that can utilize ERP for higher productivity:

  • Accounting and Finance. With advanced financial capabilities, ERP helps the accounting team track your company’s entire financial operations. All from planning, budgeting, reporting, and analytics.
  • Warehouse Management. ERP optimizes your whole distribution process through advanced warehouse operations. Warehouse staff can utilize simple yet efficient technology like barcode scanning and other advanced methods for picking items for shipping.
  • Inventory management. Inventory officers can manage and monitor inventories in one system, real-time. No matter the complexities like multiple rack locations, warehouses, and matrix items, ERP integrates all these into one.
  • Sales and Marketing. With ERP’s CRM functions, your salesforce can better manage leads, contacts, opportunities, and deals. Plus, utilizing customer portals take customer satisfaction up a notch.

Of course, there are a huge number of business functions and roles that can utilize ERP. It’s always good to review your current processes and look at areas for improvement for maximum efficiency.

What makes a good ERP software?

Businesswoman using mobile for reports and analytics

Take the following things into consideration when looking for an ERP software solution:

1. Ease-of-use

Just like with any technology, usability is very important when it comes to ERP. The best ERP vendors offer a modern, user-friendly interface that will reduce the learning curve, especially for non-tech users. Then, your company can utilize the software and optimize processes sooner.

2. Access from anywhere and mobile-optimized

Today, work-from-anywhere scenarios are becoming a new culture. For a future-proof business, an ERP software should be mobile-optimized. Workers and leaders alike are consistently on-the-go. And nowadays, it’s indeed a valuable feature to be able to bring your business anywhere.

3. Allows for as many users as possible

Some ERP software companies charge per user. For every additional user, you pay extra. This might be tricky for growing companies as they scale and need to share access to more users eventually. Acumatica ERP is one of the best ERP vendors in the Philippines that can offer unlimited users for a single annual fee.

4. Pay for what you need

The best ERP software products do not charge for a whole bunch of features you may not use. After all, an ERP system is not a one-size-fits-all. Also, instead of paying for additional licenses, they only charge for the resources and product features you actually use. In short, you only pay for what you need.

5. Safe and secure data

Needless to say, business systems like an ERP software should be built with security in mind. Cloud ERP solutions in particular take data security to the next level. This is because data is not stored locally but in the cloud, with full-time security experts doing the maintenance.

What are the limitations of an ERP software?

Now that we know what an ERP can do, we also have to consider what ERP solutions can’t do. 

Set practical expectations. Keep in mind that ERP solutions serve as tools for better management. But ultimately, success starts with the right processes and effective implementation.

Since an ERP system covers everything within an enterprise, it takes time to learn and to get used to. Every user within your company will spend some time learning the system. That’s why you should find the right ERP solution that will reduce the learning curve for your employees. Nevertheless, adopting a new technology takes diligence.

Although an ERP solution greatly increases accuracy and efficiency, it’s not a fix for faulty systems and processes. Instead, it helps you find the problems and come up with effective solutions promptly.

Another thing: ERP won’t boost your revenue overnight. Investing in an ERP software can ultimately drive profits in the long run. But, reaping the revenue benefits of an ERP takes time. Also, this can only happen with the right implementation and the right ERP solution.

Do you need an ERP?

It is likely that you need an ERP when:

1. Processes are becoming redundant and take a lot of time.

See if your operations appear to have too many redundancies and repetitive functions across departments. This might be a sign that you need an ERP solution to streamline your processes and speed things up.

2. It’s becoming challenging to spot strengths and weaknesses.

Problems may keep on happening within your supply chain and other operations without you overcoming them. The same way that you can’t pinpoint strengths in your performance and leverage on them. ERP can address these and help you find answers.

3. There’s already an overwhelming amount of spreadsheets.

Manual processes aren’t all bad. But in times when accessing important information, digging up data through hundreds of sheets can be time-consuming and inefficient. ERP solves this problem and can be best for business matters that need urgent attention.

4. You encounter difficulties thriving in today’s digital environment.

Businesses need to accelerate to thrive, especially in highly competitive industries. With this comes business automation, which is becoming very difficult to ignore. Adaptable technology like Acumatica cloud ERP software supports remote working and is designed future-proof. This ensures companies of business continuity and digital resilience that helps them thrive in a fast-paced digital world.

How to get started with ERP?

There are a lot of ERP providers out there. In fact, finding ERP providers in the Philippines isn’t as difficult as you think. 

It’s actually just a matter of finding the right ERP solution for your business.

To get you started, evaluate first your business processes and operations. Analyze what you need and start thinking about your ERP options. Next, consider which type of ERP deployment would suit your business best — on-prem or cloud-based ERP? Then, which ERP software provider offers the most features? Also, which is most user-friendly? 

Think which ERP software will benefit you in the long run as your company expands. Likewise, consider which one has the most value for money.

If you are looking for an ERP software in the Philippines, here’s a simple tool to kickstart your ERP software selection.

ERP is a significant tool that can change the way you do your business. Now that you’re all armed with the basic knowledge about ERP — don’t stop learning just yet. Read more about it and see what else there is to know to find the perfect solution for your business.

Yondu’s team of experts can link you up with the best cloud ERP solution for your business. Contact us today!